8 steps to consider before offering patient payment plans

Recently, I had a conversation with a dentist friend who owns a small general practice in my hometown. We discussed his process, particularly his approach to accounts receivables. I was surprised to hear he really didn't have a large accounts receivable balance -- due in part by requiring patients to pay their balance at the time of service.

"I am a dentist, not a bank," he said.

Corban Tenney is a senior healthcare sales manager at BillingTree.

He went on to explain that offering payment terms was a risky practice, often resulting in bad debt and extra work. However, he was willing to offer a substantial discount if a patient paid in full upfront. However, he wasn't interested in his office staff trying to "play collector." He had external funding options for the patient, but these lenders often took a large percentage of his revenue, plus not many patients wanted their credit checked just for a root canal.

I was curious about this practice but determined, through numerous conversations, that this policy is common among dental practices. Most of these dental offices require payment in full at the time of service, very few allowed their patients to pay their bill over time. It's an eye opener that 40% of adults cite cost as a major factor for not visiting a dentist -- according to the ADA's Health Policy Institute -- which might result from inadequate insurance coverage or the requirement to pay in full at the time of service.

I asked my friend what type of client-base growth he would expect to see if he changed his policy regarding offering payment terms -- by which I meant, "If the potential growth was substantial enough, would you be willing to change policies?"

He stated, "Yes, most likely."

Reducing risk factors

If you want good answers, go to the experts. Who would be considered more of an expert on collecting on bills than collection agencies? The accounts receivable management industry sometimes gets a bad rap, but they provide a necessary service. This is also one of the most scrutinized industries in the U.S.

In working directly with agencies, I've noticed many offer payment plan options but work to keep within compliance guidelines. This same pattern can be adopted by medical and dental providers.

1. Embrace technology

Numerous technologies can help reduce the risks tied to accepting payment plans. An online payment portal offers a provider the ability to automatically pull a preapproved installment payment directly from a patient's bank account or credit card.

Another consideration is to supplement payment plan options with an interactive voice response (IVR) system and text payments, along with staff-assisted phone payments. Technology can greatly reduce the amount of time your staff spends taking payments during open hours.

2. Give multiple payment options

One of the biggest reasons an invoice goes into default is because a provider is unavailable to take a payment when it's convenient for the patient. Like most people, I read my mail between 7:00 p.m. to 10:00 pm, when offices are often closed. Of course, I am reminded that I owe a payment when I see that invoice sitting on my counter -- at 7:00 to 10:00 at night. What if providers listed their online bill-pay option or their 24-hour IVR payment options on the bill? Do you think that concern might be lifted a little for some patients? Give patients the ability to pay when and how they would like -- but in ways you are comfortable with -- and don't limit it to just one option.

3. Educate your patients

If patients are aware of their payment options before they leave your office, the likelihood of receiving payment increases. Show them your online payment portal. Tell them how to access or use the 24 hour IVR payment system. Give them enough of an understanding that they won't have to rely on paying during business hours.

4. Automate as much as you can

Why simply rely on technology to remind you to take a payment, when technology can take that payment for you? Consider technology that can automate the running transactions and notify patients when a payment might be coming out of an account. This will reduce the time spent with manual entry tasks and increase the chance of timely payments.

5. Don't get greedy by adding unnecessary fees

Most collection agencies have eliminated the practice of adding fees to try and cover the extra charges for processing a payment. With the scrutiny on agencies regarding these fees, they have determined that it is not worth the risk. I would suggest that any healthcare provider follow the same approach. If you are concerned about the fees charged for payment processing, look for a technology within your budget, but doesn't skimp on quality for price -- you won't regret purchasing quality products.

6. Incentivize lower payment choices

Offering large discounts for payment upfront often reduces the office's bottom line and minimalizes the quality services provided. Instead, consider offering minimal monthly payment plans at a smaller discount. For instance, offer a 5% pay-in-full discount, a 2% discount for a three-month payment term, and no discount for more payments after three to six months. More important, make sure your technology can offer those terms.

7. Credit card compliance is just as important as HIPAA compliance

It's amazing to hear how many providers I have talked with who are storing the patient's credit card details to charge at a later date. The risk factors alone on this practice are enormous. Make sure you don't get caught out by getting help from a payment technology provider.

If your office intends to accept credit card payments and store, process, and transmit cardholder data, you need to host your data securely with a payment card industry (PCI)-compliant hosting provider.

8. Choose the right technology provider

Most revenue-cycle management (RCM) systems have a preferred partner when it comes to payment processing. This partnership usually comes down to who provides the biggest revenue share. It often doesn't come down to what technologies give the provider the most value. If you find a product or service provider that fits your needs, then I would suggest that you introduce this provider to your RCM system provider. With a little pressure, they will often allow for an integration.

Here are a few questions to consider when looking for a payment technology provider:

• Does the provider own its own technology, or is the provider a reseller of someone else?
• Does the provider offer its own customer service?
• Is the provider fully certified with payment card industry level 1 compliance requirements?

These eight simple steps can mean adding a whole lot to your bottom line as a dental practice. You and your staff are freed up to execute critical tasks, your customers have a convenient way to pay anytime, and you are safe in the knowledge that your practice is meeting compliance regulations 24/7.

Corban Tenney is a senior healthcare sales manager at BillingTree.

The comments and observations expressed herein do not necessarily reflect the opinions of DrBicuspid.com, nor should they be construed as an endorsement or admonishment of any particular idea, vendor, or organization.